As the clock ticks down on the last days and hours of 2010, the time seems appropriate for reflecting on the American economy's performance during the Lost Decade of 2000-2010. Over the past ten years, the US economy has performed more poorly on every key output, employment, wage and salary, and household/family income measure than at any time since the Great Depression of the 1930s. The deep recessionary conditions prevailing in the nation's labor markets at the end of 2010 will carry into the new year and continue to create havoc for many working families.
The main story which has not been well covered by the national media can be told as follows. First, the nation's real Gross Domestic Product, a measure of the aggregate output of final goods and services, grew by only 17% over the past decade, the worst economic performance in 70 years. In the 1990s, the US economy grew by 40%, and we never experienced a GDP growth rate below 37% since the 1930s. Adjusted for population growth, real GDP per capita increased by only a little over 7%, again a 70 year record low.
Second, the nation's real GDP peaked in the fourth quarter of 2007 immediately prior to the onset of the Great Recession of 2008-2009. At the end of the third quarter of 2010, we still had not yet recovered our previous peak output level. In only one other time period from late 1980 to early 1983 did the US economy fail to grow over a three year period.
Third, the number of wage and salary workers on the payrolls of private non-farm employers and government agencies (federal, state, and local) actually declined over the decade by 1.573 million or 1.2%. This marked the first decade of decline in payroll employment since the federal government began collecting such data in the 1940s. In the previous three decades, the number of payroll jobs in the country had increased by 20 to 28 percent. The steep decline in payroll employment from 2007 to 2010 was the main contributing factor, with more than 8 million payroll jobs lost between the fourth quarter of 2007 and the first quarter of 2010.
Fourth, the total number of civilian workers (16+), including the self employed and independent contractors, only increased by 2.1 million over the past decade. All of this growth in civilian employment was due to adults 55 and older. The number of workers under age 55 fell by about three million over the decade, with very substantial declines in in the number of employed teens, 20-29 year old young adults, blue collar workers, and males without post-secondary degrees. These steep declines in employment and annual earnings among young men without bachelor degrees have had severe adverse effects on marriage rates, household formation, and the share of children born out of wedlock to women under the age of 30.
Fifth, the steep drop in payroll employment in recent years has driven up the official unemployment rate close to 10% at the end of the decade. The nature of these unemployment problems also has changed dramatically over the past few years. The mean duration of unemployment has risen close to 28 weeks, the highest duration by far in the nation's post-World War Two history. The number of workers unemployed more than 52 weeks had risen to 3.25 million in 2010. This number of very long term unemployed was 15 times as high as it was in 2000 at the close of the prior decade when US labor markets were operating close to full employment. The 15 million official unemployed were accompanied by 9 million underemployed, 6 million hidden unemployed (wanting work but no longer actively looking), and 10 million malemployed college graduates working in jobs that do not require a college degree. Over 40 million American adults were facing one of these four labor market problems in 2010, the largest number by far in the past 50 years.
America's labor markets were in a true state of depression for the young, the less well educated, blue collar workers, and low to low-middle income workers. Who will tell the people? Hopefully, the Obama administration will step up to the plate, admit the true dimensions of our labor market problems, and propose a comprehensive set of economic development and workforce development strategies to address these problems in the coming years. Broad based, private-public partnerships will be needed at every level to help restore our nation's labor markets to full employment.